starbucksv amsterdam

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Starbucks Coffee Company:An Integrated Marketing Communications PlanApril 2006Prepared for:Starbucks Coffee CompanyW. H. EvansPrepared by:Sophie van der VechtNeni PogarcicHidde van der DussenTim EnsingDan MackinnonLucia SuchankovaExecutive Summary .................................................................................................................3Introduction ....................................................................

...........................................................4Mission .........................................................................

.............................................................4Product ......................................................................................................................................5Price...........................................................................................................................................7Place ..........................................................................................................................................7Promotion ..................................................................................................................................9Competitive Analysis ...............................................................................................................9

Customer Profile .................................................................................................................... 17SWOT Analysis ..................................................................................................................... 18Segmentation ......................................................................................................................... 22Targeting ................................................................................................................................ 23Positioning ............................................................................................................................. 23Financial Analysis ................................................................................................................. 23Advertising Plan ................................................................

.................................................... 26Definition of the Problem/Challenge ............................................................................. 26Research results ............................................................................................................... 27Advertising Objectives .......................................................................................................... 29Strategy: Media Plan ............................................................................................................. 30Mix ...........................................................................


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........................................................ 30Frequency......................................................................................................................... 31Cost insertion ................................................................................................................... 32Flighting ........................................................................................................................... 32Strategy: Creative .................................................................................................................. 32Creative platform............................................................................................................. 32Big Idea ............................................................................................................................ 33Appendix A:Price of a Starbucks tall latte........................................................................... 34Appendix B: Map of Downtown Amsterdam...................................................................... 35Appendix C:Marketing to Youth exerpt............................................................................ 36Appendix D: Average Statement of Earnings ..................................................................... 37Appendix E: Amsterdam Pro Forma Statement of Earnings .............................................. 38Appendix F: Pro Forma Balance Sheet .............................................

................................... 39Appendix G: Amsterdam high and low forecast Statement of Earnings ...............

............ 40Appendix H: Advertising Pyramid ....................................................................................... 41Appendix I: Creative Series 1 ............................................................................................... 42Appendix J: Creative Series 2............................................................................................... 44

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,Tim Ensing, Dan Mackinnon, Lucia SuchankovaExecutive SummaryWe have investigated the possible launch of the Starbucks Coffee Companyin the Netherlands, where we tried to combine the Starbucks way of doingwith the local Dutch market. Our mission therefore is to successfullyintroduce while paying attention to the Dutch needs and expectations.The standardized Starbucks products will be used such as coffee, tea, andmerchandise, except for the pastries, where we strive to localize to betterintegrate with the local market. The products will be premium priced,according to the Starbucks strategy. As a result, Starbucks will be

established as a premium brand. The first store will be opened in Amsterdamin a promising and popular area under the local community. After this wewant to expand in Amsterdam and other major cities in the Netherlands.Although Starbucks will have to compete with several other coffeecompanies, our research shows that Starbucks has a strong affection withthe potential customers, even though the competition scores better in someaspects. Through our premium name, we want to secure this preferredposition.The target market, and therefore the customers that will visit Starbucks


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Amsterdam, fit the profile of traditional Starbucks customers in other cities.The Netherlands are very diversified as are the Starbucks customers andtherefore we expect a quick acceptance in the Dutch market, even frompotential customers who still do not know Starbucks.Starbucks should segment the market in the future through demographic andbehavioral segmentation, and apply differing strategies to appeal to eachsegment.The financial expectations are positive, Starbucks Amsterdam expects aprofit in its second year, and it should take around 4 years to pay off theinvestments and losses which will be generated in the first year.In terms of an advertising plan, the main initial goal is to gain awarenessthroughout the primary and secondary target markets. This will be achievedthrough a variety of mediums, including posters and billboards, newspaperads and the internet. The creative strategy aims to create awareness throughexcitement and pride about living in Amsterdam, a city on the map.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 200Tim Ensing, Dan Mackinnon, Lucia Suchankova

IntroductionThis marketing plan is going to investigate the possible launch of StarbucksCoffee Company in the Netherlands. We will focus primarily on marketing andadvertising, in which we want to develop a possible plan and try to forecastthe success of this store.We want to state clearly that this plan will be based on existing Starbucksinformation, combined with our observations and knowledge of theNetherlands. We think that the Starbucks strategy, mission and action planare very good. Otherwise there is no way that a coffee company would bethis well-known and this popular. That is why we will change small aspects ofthe whole existing strategy and adapt this to the Dutch market. The Dutch

market has some special characteristics which will not accept the Americanway of Starbucks. Although somewhat exaggerated, the following can give aclearer understanding of the Dutch culture:The Dutch care very much about the environment and see socialresponsibility as an important factor. The Dutch do not have acoffee-house culture, even though they like coffee a lot. This istranslated in our opening hours of bars and coffee places, thatgo from late in the morning, until late in the evening. The Dutchdo not usually spend money very easily on food and beverages.The Dutch respect good service, and they love special discountseven if its just for a specific group (the students for instance),and they do not see as a negative aspect.

MissionOur mission is to introduce Starbucks to the Netherlands by opening a teststore in Amsterdam.We will focus on making our Amsterdam storesuccessful by adapting to the needs of the local customers while keeping thecore Starbucks strengths intact. This store will set a positive example ofcorporate social responsibility by adhering to our high environmentalstandards and create a positive experience for customers to create repeat


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business.ObjectivesTohave first year revenues of 450,000Tokeep first year operating expenses below 300,000Toearn a profit in the second operational yearTohave an average occupancy rate of 75% in the first yearTohave a first year market share of 15%Tohave first year average invoice of 5Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprilTim Ensing, Dan Mackinnon, Lucia SuchankovaProductThe Starbucks product can be divided into actual tangible products (whichcan be further divided into direct consumption products and merchandise

products) and an intangible service part. The products will be described first,later on the service aspects of Starbucks will be explained.Evidently, the main product of Starbucks is coffee. That is what the chain isknown for. All different coffee variations are part of their product portfolio.Other drinks, like tea and soft drinks, are also direct consumption products.When launching the Starbucks location in Amsterdam, this group ofStarbucks products should remain the same as they (especially the coffees)carry the absolute essence of Starbucks.Another important group of products that are directly consumed withinStarbucks are small snacks. Starbucks chains in the United States forinstance are known for the fact that they also serve donuts, muffins, cake

and other snacks that are alike. These products are quite popular andfrequently ordered by customers to go with a cup of Starbucks coffee. One ofthe reasons for the success of these side snacks is the American culture ofhaving breakfast and lunch outdoors. Moreover, these snacks are for someAmerican Starbucks customers actual breakfast products. However, thesituation in Amsterdam, the Netherlands is quite different than in the UnitedStates due to cultural and behavioural differences. For instance, Dutchpeople are known to be a bit closed and breakfast and lunch moments areseen as private moments of quality time, also for business people. Whenlaunching Starbucks in Amsterdam, without adapting anything, the side,snack products could become a bottleneck as sales could be disappointing. Inother words, this product category poses a challenge as the objective is tolaunch Starbucks in the Netherlands and serious decreases in any of the

product categories could seriously harm this ambitious goal. Needless to say,an adaptation within this snack product category should be made to fit Dutchquality standards, behaviour and culture. Donuts and muffins could easilystay in the product portfolio, but they should not be characterized asbreakfast or lunch products. They should be seen and promoted as sidesnacks. Different sorts of cakes could also be added, as they are very popularin the Netherlands to go with a cup of coffee or tea. Products that could beserved as lunch could be healthy sandwiches and salads. Sweet productsshould never be promoted as lunch products as they are normally seen in theNetherlands as snacks as opposed to lunch food. On the other hand, one


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should never change a winning formula. It is wise to slightly adapt theStarbucks formula to fit the Dutch market, but this should not be overdone,because then Starbucks would run the risk of becoming like others. In otherwords Starbucks should keep its identity and make slight adjustments toserve the Dutch market best.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2Tim Ensing, Dan Mackinnon, Lucia SuchankovaAnother product category consists of the products that are not immediatelyconsumed at the spot. Starbucks merchandise, like coffee mugs, and coffeein packages are important products here. A regular Starbucks customer canpurchase his or her own coffee mug or buy the real Starbucks coffee tocreate the same kind of coffee at home to get a consumption experience thatmatches the one at Starbucks. Fair trade products are quite popular in theNetherlands and one of the most consumed fair trade products is coffee.Maybe there lies an opportunity (an alliance with for instance Max Havelaaror other well-known fair trade coffee producers) within this area forStarbucks. Another opportunity within this product category is formed by alink with the other, direct consumption, products. This link is given shape bythe possibility of launching a saving and bonus system. Almost every popularDutch chain uses a saving and bonus system. Starbucks could, for instance,give customers that frequently order coffee at Starbucks the opportunity tosave certain saving units (for instance Bucks) in order to get free

merchandise (for instance a free coffee mug). Also, to fit the notion ofservitization: the adding of services to make a product a more complete one,one could be given to opportunity to customize his/her own coffee mug.Evidently, this service should be launched later on and only if the coffeemugs prove to be a commercial success.Another aspect of the Starbucks product is the service part. Maybe thebiggest part of the Starbucks service is the creation of a very cosy, home-likeatmosphere that invokes social interaction (which is beautifully characterizedby the American hit television series Friends). This intangible atmosphere issupported by certain tangibles like comfortable couches and big loungingchairs. This creation of tangibles is very important as it makes the intangibleatmosphere tangible. This relaxed and friendly atmosphere is also enhanced

by the way customers are treated by Starbucks personnel. The orderingsystem does not look extremely streamlined and therefore sends out acomfortable and relaxed atmosphere. Ironically, all customization of thecoffee and tea is done by the customers themselves at specially designedcorners with sugar, milk and other products. This customer freedomcontributes to the relaxed and cosy atmosphere while it also helps Starbucksto reduce personnel tasks and handle/serve more customers than otherwisewould be possible. A possibility when launching Starbucks in Amsterdamcould be providing a free WiFi wireless internet connection. This servicewould also enhance consumption at Starbucks within certain targetedsegments (mainly young to middle-aged people and business people) and itcould gently help keeping other customer groups out of the Starbuckslocation (youth hanging on the streets). Therefore it could help Starbucks

create more of a sophisticated image as WiFi wireless internet connectionsare not yet a common service at lunch places and chains in the Netherlandsas opposed to other countries. This possible service thus provides StarbucksSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2Tim Ensing, Dan Mackinnon, Lucia SuchankovaAmsterdam with a valuable opportunity. Details with regard to this serviceopportunity aspects will be clarified in the SWOT analysis part.


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According to the Economist and CNN/Money a Tall Latte in Starbucks (one ofthe most ordered coffees) costs in Europe around $3,72, or 3,10 (Pleasesee Appendix A). Our suggestion is to use this price. We have severalreasons for this. First of all, this is a Tall latte, a coffee what is not goingtobe popular in Holland because of the size. It is too big. So a smaller coffeewould be a fraction cheaper, what could result in a price round 2,75. This isa reasonable price for a such a location in Amsterdam. It is still premiumpricing, compared to the competition. Weve chosen to pursue a premiumpricing strategy because that is in line with the Starbucks ideology.We can illustrate this best with the next anecdote:What s more, Starbucks already has a reputation for having themost expensive coffee in the marketplace. When I leftMoneybox s New York headquarters to conduct research at theclosest Starbucks (a block away), I passed a half-dozen othercoffee vendors. There s the guy with the cart who sells the littGreek diner cups for 50 cents; the deli with the scalding 75-cengeneric joe and the thin paper cup; the convenience store with$1.00 faux gourmet stuff; and Cosi, where a latte costs $3.59.

Only after running this gantlet could I enter Starbucks, where ajava chip Frappuccino runs $4.75.D. Gross, OcThis New-York based story is exactly what we want to achieve in Amsterdam.Premium pricing combined with a premium name. We already mentioned ahigh rate of potential customers who already know Starbucks and want aStarbucks in the Netherlands. This rather high price will be approved by thecustomers through our clear statement of corporate social responsibility.

The first Starbucks in the Netherlands will be opened in Amsterdam, thecapital city. (Please see Appendix B for a city centre map.) This choice israther obvious for several reasons. We quote the Starbucks Marketingpolicy:1 Starbucks customers are people of diverse ethnic, income and agegroups with varying tastes and interests.11http://www.starbucks.com/aboutus/marketingPolicy.aspSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,Tim Ensing, Dan Mackinnon, Lucia SuchankovaAmsterdam is a very diverse, dynamic and busy city. The city where history

and future meet each other, the city with approximately 60.000 students,100 ethnicities, lots of global firms, thousands of small firms, ten milliontourists per year, and a city without Starbucks. We see Amsterdam as aopportunity for Starbucks, because of the striking similarity between themarketing policy of Starbucks, and the characteristics of Amsterdam.Where as the decision of first city in the Netherlands to launch Starbucks wasnot a problem, it is a lot harder to decide where in the city we can place thefirst Starbucks. As you already may know, Amsterdam is a segregated city inwhich different customer groups are divided throughout the city. On the last


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page, you will find a map of Amsterdam so, this part of the story can memade clearer. The large amount of the tourists can of course be found in thecenter of Amsterdam. Where the two big shopping streets, Leidsestraat andKalverstraat, with the four big squares around, the Damsquare, theLeidseplein, Museumplein, and Rembrandtplein.. At first sight, this looksthe best area to place the first Starbucks. It is the most popular area, with alarge amount of people, and therefore a large amount of potential customers.But it is also an area with a lot of problems. Small (sometimes even criminal)groups create a lot of trouble here, and this could create a negative imagefor Starbucks. These groups are well-known and last thing a shop wants issuch a group inside. This is especially important for coffee places such asStarbucks, because there is a strong chance these groups will tend to goinside. This also explains why there are a few coffee places like Starbucks inthe center. Of course this low penetration offers a lot of possibilities andpotentials, but this will be discussed in the SWOT analysis.The east and far west side have a rather negative image in Amsterdam. Thatis why Starbucks should not open their first coffee place in this area. As inthe center, this area has a lot of potential, but for the introduction of a newbrand, we need something different. There are three potential places left.Java island is at this moment the hippest place in Amsterdam. The place tobe, so Starbucks could have a very strong appeal if it would locate it self atthe island. The problem with this island is that it is too far from the center ofAmsterdam, and therefore it is not appealing for a great part of potential

Starbucks customers. Another possibility is the business area, like saidbefore, due the strong segregation there are areas with specific customers.This is a very nice part of the town, with also a big potential customer group.The last potential area is called the nine streets. The nine streets are ninesmall streets with cozy shops, lunch cafs, and lots of people. The publichere is very diverse, students, tourists, ethnic groups, businessmen. The lasttwo locations are both very good and promising. We think that the ninestreets have the most similarities with the Starbucks marketing policy.Therefore, our first location in Amsterdam should be in the nine streets. Weexpect to have a large diverse potential customer base, and to develop astrong customer base because of our location.

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprTim Ensing, Dan Mackinnon, Lucia SuchankovaThe next locations can be located throughout the Netherlands. The expansionin Amsterdam could of course continue with some of the locations alreadymentioned above such as the Business area at the Beethovenstraat and atJava Island.Other locations in the Netherlands would be of course in the big cities, as isclear in the Starbucks strategy. The highly developed area in the Netherlandsis called de Randstad. De Randstad is the political, academical andeconomical heart of the Netherlands. This is the area with the four biggestcities of the Netherlands: Amsterdam, Utrecht, Rotterdam and the Hague.These four cities should be the main focus of Starbucks in the first period.Like Amsterdam, the other three cities are very diverse with an own local

culture. These cities possess like Amsterdam all the necessary characteristicsfor a successful launch of Starbucks.PromotionPlease see Advertising Plan.Competitive Analysis


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Big cities like Amsterdam will always be crowded with diverse people.Students, tourists, ethnic groups and businessmen are examples of thediversity that one can notice in the city as a whole. This diversity will alwaysattract a lot of businesses that will compete to serve all the different kinds ofpeople. Restaurants, small bars, cafs and pubs can be defined as placeswhere all the different kind of people will go to, so they can drink coffee, eatsnacks, have a break and sometimes have breakfast/dinner. The publicplaces that have been mentioned here are very abstract and include a lot ofdifferent companies. Two companies will be describe in further detail,because they are considered as big coffee chains that will be strongcompetitors of Starbucks.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprTim Ensing, Dan Mackinnon, Lucia SuchankovaCoffee CompanyThe Coffee Company is a chain of

fast-drink

coffee houses in Amsterdam,

this one is expanding "slowly but surely". Much like the world famousStarbucks Family. They serve fresh coffee of all sorts, flavours and sizes allday, accompanied by "irresistible sweet things" and rather less remarkablesandwiches.The Coffee Company serves every corner of town. The branch on theBeethovenstraat is the most recent addition to the family, situated in thelobby of Hotel Beethoven. It offers a modern concept with bright shades, acool dcor and nice atmospheric music. A strong ristretto is the best start toa hectic day. The different outlets barristas (bar operators) have a differentway of working the espresso machine, despite the fact theyve been trainedthe same way.

Bagels & BeansThe Bagels & Beans company started in Amsterdam in 1995. Bagels & Beanskey features are a place of rest and harmony, where the customers can easyread their newspapers. According to the Bagels & Beans website the qualityof the service is more important than the quantity. The Bagels & Beanscompany is located in fifteen places in the Netherlands and in Amsterdamthere are nine locations. The quality of the coffee is very good at the Bagels

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprilTim Ensing, Dan Mackinnon, Lucia Suchankova& Beans company, however they do not offer a very wide product line ofdifferent kinds of coffee. The product line of Starbucks is much moredeveloped. Like Starbucks, the Bagels & Beans company do offer a wirelessinternet facility. The customers are therefore able to use the internet at theirlaptops, while drinking their cup of coffee in a very nice environment.Analysis


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Starbucks is a well known chain in the Netherlands although it does not existin the Netherlands. Studies, in the form of questionnaires, actually haveshown that possible Dutch customers have a positive stance when it comesto the possible launch of a Starbucks establishment in the Netherlands.Therefore, the idea of launching Starbucks in the Netherlands has potential.The places that have been mentioned above offer the primary product ofStarbucks. That is, as we concluded in the product analysis, the coffee thatwill be consumed at Starbucks. Although, those several restaurants, littlebars, cafs and pubs try to serve the same customers, there are differencesbetween those public places. In this paper will try to map out whichcompanies are the strongest competitors that has to be dealt with. That willbe done by comparing the features of the several companies. The mostimportant feature that has to be compared will be the product and theservice that will be offered.The secondary product, as we defined in the product analysis, are the smallsnacks that are offered at Starbucks. Those products are defined assecondary products, because those are most of the time bought incombination with coffee. Some providers of small snacks, like bakeries, donot offer this combination of products. That is why they do not have to bedefined as competitors.The last Starbucks categories of product are Starbucks merchandise, likecoffee mugs, and coffee in packages. The analysis of this product categorywill make clear the reason this additional product category is offered by theproviders of the primary product. We will also consider what the combination

effect is of the primary product and this additional product.First we will compare the quality of the product of Starbucks with the qualityof the product offered by the other public places that have been mentionedbefore. At the website of Starbucks there is a lot of information available thatrefers to the quality and taste of the coffees one can buy. At the websiteregions and tastes are defined, so one can choose the coffee he or she likesthe most. Regions that have been defined are Latin America, Africa Arabia,Asia Pacific, dark roast blends, multi-region blends.

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprilTim Ensing, Dan Mackinnon, Lucia SuchankovaIn comparison with the other competitors of Starbucks, one can concludethere is no company that describes its coffee as detailed. The width of theproduct line points out that the quality of the product defined by Starbucks isvery important.Starbucks purchases and roasts high-quality whole bean coffees and sellsthem along with fresh, rich-brewed, Italian style espresso beverages, avariety of pastries and confections, and coffee-related accessories andequipment -- primarily through its company-operated retail stores.The sentence above is a quotation that can be found at the website of

Starbucks. High-quality whole bean coffees is an other example of being amore high quality provider than the competitors.At Starbucks, the coffee is served is big carton cups. Although the cartoncups are rather good, it is being perceived by customers as beingqualitatively less than the normal cups being used in restaurants and bars.The two quality aspects of the product has been combined in the graphbelow.From thiQuality coffee


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that theseen as whole.considerproviderCompany Bars/also. Atrestaurantspossiblewidth raQuality cupsCoffee Company the in cups Starbucks. The coffee is served in regular mugs in stead of carton cups.Bagels & Beans do not offer a width range of coffee products. Compared tothe Starbucks, the product line of Bagels & Beans is rather limited. However,they do serve the coffee in cups of good quality like the Coffee Companydoes.An other aspect of the primary product is the service that is offered by

Starbucks. As already pointed out in the product and service analyses,Starbucks customers are served in a friendly atmosphere and one can makeuse of the wireless internet connection, while sitting in comfortable couchesand big lounging chairs. Although, there are relatively less comfortablechairs, it has to be considered as a very differentiated way of serving thecustomers.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2Tim Ensing, Dan Mackinnon, Lucia SuchankovaCustomers that are served in Starbucks will always notice the availability of

the chair, however they might not be able to use them due to the fact thatthey are in use by other customers. The facilities offered by Starbucks arequalitatively better than the facilities offered by most restaurants, little bars,cafs and pubs. The friendly environment, wireless internet connation andcomfortable chairs are the most important aspects for this conclusion.The staff in Starbucks is not considered as being customer centered. It is notpossible to order anything by a waiter. Customers have to order additionalcups of coffee at the pay-desk. They have to pay there and afterwards theycan get there coffee. This is not considered as a really goods service togenerate additional orders from customers. On the contrary, bars andrestaurant provide better service to do so. Most of the times people can order

extra drinks at the waiters ones can find there. The availability of waiters inStarbucks is not considered as important by Starbucks. Customers get arather big cup of coffee and therefore most of the times reordering is notnecessary. Most of the customers leave after have drunk their coffee. This isnot considered as a problem, because it provides the possibility to serve newcustomers that enter the Starbucks.The Coffee Company does not see the absence of the waiter as a problemalso. This is the feature that Starbucks and the Coffee Company have incommon. Still there are some differences between the Coffee Company and


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Starbucks. In Starbucks ones can use the wireless internet connection andcomfortable chairs. Those facilities are not offered at the Coffee Companyand therefore the quality of the environment of Starbucks is consideredbetter than of the Coffee Company.Bagels & Beans do offer a wireless internet connection and the quality of theenvironment is considered as very important to compete with competitors.The comfortable chairs one can find in Starbucks will not be available atBagels & Beans, but the quality of the environment is improved by creating avery relaxing environment as one can see at the pictures available above atthe introduction of the Bagels & Beans company. In conclusion ones can saythat the quality of the staff and of the environment are both qualified asgood.One caQuality StaffservicBars/the strestaurants

staff and thadditithat ifor thQuality environmentSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,ATim Ensing, Dan Mackinnon, Lucia Suchankovaaspects of the service has been combined in the graph left.The last Starbucks categories of product that we have defined are Starbucks

merchandise, like coffee mugs, and coffee in packages. The analysis of thisproduct category will make clear the reason this additional product categoryis offered by the providers of the primary product.Starbucks can be defined as a coffee restaurant with a high quality coffeeand a friendly atmosphere. The comfortable chairs give the customer thefeeling of being in their home environment and not being in a public place.The mugs provide the feeling of being one of them and therefore createsome kind of a Starbucks community. The combination effect of the primaryproduct and this additional product is that the coffee must be drunk in acomfortable and homelike environment. The mugs are a useful tool forcreating this environment.Quality coffee

CC


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Bars/restaurantsQuality cupsThe two graphs that where created during the analysis are shown aboveagain. We can conclude that the coffee company does not provide a goodquality of cups and staff. Nonetheless, they are product leader when it comesto the quality of coffee and the environment. This combination is the key tosuccess for Starbucks as a whole and should be considered a unique sellingpoint.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,

Tim Ensing, Dan Mackinnon, Lucia SuchankovaFive forces modelA very suitable model to explore the competition in a market is the fiveforces model of Porter. This model is visualized in figure 1. The main essenceof the model is that competition does not only come from one side, but fromseveral directions. It can be separated in several kinds of threats and risks.First of all there is a market with direct competitors that a specific player isinfluenced by. Besides those direct competitors, a company should be awareof substitutes, suppliers, buyers and potential entrants.

Coffee market competitors Intensity of rivalryThe main competitors have been pointed out in last chapter competitors. Ithas been concluded that there are two strong competitors in the market:Bagels & Beans and Coffee Company. Both do have several stores located inAmsterdam and already have a loyal customer group. Nonetheless, it hasalso been concluded that Bagels and Beans does not offer a wide product lineof coffee and therefore in the coffee market the Coffee Company should beconsidered as the main competitor. Bagels and Beans should be defined asmain substitute.SuppliersThe suppliers of Starbucks can be found in many part of the world.

Our connection with coffee farmers Purveying qualitycoffees means much more than selecting the finest beans on themarket. Starbucks strongly believes in the importance ofbuilding mutually-beneficial relationships with coffee farmersand coffee communities with which we work. The success of thefarmers with whom we do business is a critical component ofSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April


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Tim Ensing, Dan Mackinnon, Lucia Suchankovaour own success. We are taking an integrated approach tobuilding relationships with coffee communitiesThe sentence above is a quotation that can be found at the website ofStarbucks. One can conclude from this sentence that Starbucks put a lot ofeffort in retaining a good relationship with its suppliers. The quality of thecoffee is very important to Starbucks and therefore the bargaining power ofgood and big suppliers is rather big. However, sometimes it is rather easy toswitch between suppliers within a region, but a good quality and supply ofcoffee can only be provided by a selected number of trusted suppliers.BuyersCustomers that buy from Starbucks do have little influence on theprofitability, at least as an individual. When they group together, theirbargain power will increase. However, this is not something that will happenvery quickly. Starbucks wants to generate loyal customers by providing a lotof advantages for the environment. As an example Starbucks has launchedthe Starbucks Foundation. The sentence below is a quotation that can befound at the website of Starbucks and will provide some insight in theactivities of the foundation:Introducing soccer and sonnets America SCORES wasfounded ten years ago by a Starbucks barista in Washington,

D.C. who loved soccer and poetry. Today, America SCORESserves nearly 4,000 poetry-performing soccer players in 13Starbucks cities, and growing.What makes this nonprofit a national phenomenon is that it getsto the heart of what motivates kids: teamwork, sportsmanship,creativity, and performance.America SCORES continues to provide partners with rich andmeaningful opportunities to help youth in their neighborhoodsThreat of new entrantsIt is necessary to have a good network of suppliers if one wants toparticipate in the coffee market. It will take special skills to build a networkof suppliers like Starbucks. All the suppliers have to be carefully selected in

all the different parts of the world. Suppliers of Starbucks come from regionslike Latin America, Africa, Arabia, Asia and the Pacific. It will take years tobuild a network like this and therefore one can say that there is a bigentrance barrier. In conclusion one can say that the treat of entrance of newcompetitors rather small is.SubstitutesAlthough the treat of entrance of new competitors is rather small, thenumber of substitutes is rather big. Bagels and Beans has already beendefined as the main substitute, but there are a lot of companies that offerSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April

Tim Ensing, Dan Mackinnon, Lucia Suchankovaproducts that are a substitutes for the width coffee product line of Starbucks.The normal coffee that one can order in restaurants, without all the specialtastes and options are the biggest substitute for the special coffee ofStarbucks. The availability of other drinks, like tea, chocolate milk or softdrinks are substitutes for the coffee that Starbucks provides. Restaurants,little bars, cafs and pubs offer these kinds of products and that is why thoseorganizations can be seen as the main substitute for Starbucks.


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Customer ProfileStarbucks customers constitute mainly of customers that consume Starbuckscoffee and side products within the Starbucks establishment, customers thattake Starbucks coffee and other products to go and customers that come toStarbucks for the special Starbucks merchandise. However, it is assumedthat customers in this last group are also part of one or two of the first twogroups. Various combinations are therefore also possible.Evidently, just like every competitor, Starbucks should focus on customerswithin a wide variety of segments. Every customer that drinks coffee atStarbucks, takes coffee-to-go and spends money on Starbucks merchandise(mugs and coffee packages) is a valuable one. It is thus important to keepthe area to focus on wide, without excluding valuable customer segments.A statement directly copied from the Starbucks marketing policy clarifies thisnotion, and can be seen in Appendix C.Introducing a bonus saving system (allowing customers to safe for freecoffee mugs and Starbucks coffee), which is very common in Holland, is anapplicable tool when trying to fit the Starbucks concept with the Dutchcustomers and habits. This will be appealing to frequent customers across allcustomer groups and therefore strengthen the overall Starbucks position inthe Dutch market.

Although remaining a wide focus is crucial in order to establish share of mindwithin all kinds of different customer segments, another parallel narrowedmarketing effort to appeal to a certain particularly important group ofcustomers can also be useful. Although direct actions in this area are of moreimportance for the marketing and advertising department, certain aspectsare closely linked to the desired target segment and therefore worthmentioning in this customer section.Youth (including so called young urban professionals and double income, nokids-households) has always been a very important customer group forStarbucks. Having a considerable market share in youthful customersegments holds the key to future growth and Starbucks has always been

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2Tim Ensing, Dan Mackinnon, Lucia Suchankovavery keen on stimulating certain activities in this particular area. This hasbeen done by sponsoring certain youth events worldwide, public relationsand contracting celebrities that are appealing to youthful Starbuckscustomers. A Dutch Starbucks location in Amsterdam should adopt the samestrategy. Examples of tools to facilitate this tendency could be the sponsoringof certain Dutch youth events (there are lots of them in Amsterdam), asmentioned before offering a (free) WiFi Internet connection service to appealto young mobile customers, and maybe introducing special reduced studentpricing systems that are also very common in Holland. All these tools could

be helpful when trying to gain ground in the important young customersegments in the Dutch market rapidly.Concluding, remaining a wide focus when it comes to customer segments isof great importance, because Starbucks should not rule out certain customergroups, as every customer is a valuable and potentially profitable one. Butbearing in mind that certain customer groups and segments are of extraimportance (youth) and adopting parallel marketing strategies andaccompanying tools, fuelled by an extra marketing effort within thesecustomer segments, to expand market share among these customer


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segments may be a wise corporate customer strategy for Starbucks. TheDutch market is no exception here.SWOT AnalysisThis part is devoted to the analysis of the internal and external environmentof Starbucks, when launched in Amsterdam, in the form of a SWOT analysis.Although there are some drawbacks of a simple SWOT analysis that aregenerally agreed upon, for instance the lack of financial implications andclear future scenario recommendations based on the analyzed environment,it always is a helpful tool in making the first step to explore the environmentof an organization. Especially when trying to enter a foreign and thus newmarket.StrengthsOne of the most important strengths of Starbucks, and this counts for everyStarbucks location, is its worldwide image. All across the world, people arefamiliar with the American Starbucks concept. People also know thatcelebrities like Britney Spears even fly back to the States to get a cup of realStarbucks coffee during their busy schedules. The Dutch market is noexception in that matter and people even have a positive stance with regardto a potential launch of Starbucks in Holland. There has even been someresearch with the possibilities of Starbucks survival in Holland (see

Appendix). Share of mind among potential Dutch customers is alreadyachieved. Share of heart is the next step.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprilTim Ensing, Dan Mackinnon, Lucia SuchankovaAnother strength of Starbucks is the fact that it combines certain aspectsthat have not yet been combined by others. A considerable range of differentquality coffees has been a major selling point for the Coffee Company,however they do not offer a comfortable and cosy environment likeStarbucks does. Offering a nice atmosphere to consume in has been point offocus for many lunch areas in Amsterdam, but none of them is so specialized

and advanced when it comes to quality coffee. One might say that Starbucksholds the key formula and owns best of both (competitive) worlds inAmsterdam which could be considered a sizeable strength.Yet another strength of Starbucks lies in its expanded worldwide network andcommunity along with close relationships with its suppliers. This generates acertain level of know-how with regard to different markets all over the world,consumer behaviour and quality expectations. All of the aforementionedgenerates a valuable kind of database which could help young Starbuckslocations, like the one in Amsterdam, to make a flying start, outperformingcompetitors and rapidly grasping market share.Being able to customize your own drink (and maybe one day even your own

Starbucks coffee mug) fits the recent customization trend and sends out acertain atmosphere of freedom that blends in perfectly with the relaxed andcosy ambience that is supported by the interior of the Starbucks chain. Afterordering a drink the customer has the possibility to customize the drink witha whole range of essences, flavours, sugar, cream, powders and otherproducts. This is also an example of prosuming (combination of productionand consuming), which is a consumer effort to engage in the productionprocess which in its turn generates a certain bonding with theproduct/service provider (in this case a bonding between the customer andStarbucks). However, this self service freedom could also be seen as a


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weakness as it is contrasting with the high prices charged at Starbucks.WeaknessesStarbucks sells moderate to good quality coffee against a premium price.Nevertheless a considerable part of the service a customer receives atStarbucks is actually self service. This self service is not exactly in line withthe value proposition Starbucks communicates with its quality coffee andaccompanying premium price to potential customers outside and could beseen as an odd aspect, especially in Holland where certain customers groupsare seen as cautious and quality demanding when it comes to (relativelyhigh) expenditures. Also, according to the Treacy & Wiersema model (DeVries, Goud & Goud , 2004) of service value ( this combination of productand service quality, high financial fee and self service is something strangeand could be seen as being stuck in the middle:Service value = (Service result * Service delivery)/(Financial fee *Consuming effort)Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprTim Ensing, Dan Mackinnon, Lucia SuchankovaSelf service fits in with an operational excellence strategy accompanied by alow financial fee. However, the high price as charged for Starbucks coffee,goes together with a product leader value position. Starbucks has a rare mix

of those two and this could be seen as a weakness since Dutch customersknown to be quite critical when it comes to expenses and accompanyingservice expectations.An additional weakness could be found in the way Starbucks coffee is served:paper cups. Once again, there is a contradiction within the Starbucks modusoperandi here, since a high price and premium product do not go togetherwith paper cups (in Holland). Paper cups for coffee-to-go is acceptable, butfor consumers who decide to stay and consume their product within theStarbucks location this could prove to become a problem. Paper cups arevery common in chains in America and do not have a direct link with inferiorquality contents. In Holland however, this link does exist. The CoffeeCompany, one of the key competitors of Starbucks, has found its way around

this problem and serves its drinks in a type of glass cups that is verycommon in Holland. Starbucks should think about this problem and maybeeven choose to serve its drinks in mugs instead of paper cups. Of coursethen there is the problem of extra tasks like collecting the mugs and cleaningthem. Bycoming problem could be the possibility of people stealing originalStarbucks coffee mugs, but this problem could be tackled by introducingsomething very common in Holland: a bonus system, which allows thecustomer to collect bonus units in order to safe for free gifts. So in a way thepossible countermove to bypass a Starbucks weakness holds the key to anactual opportunity.OpportunitiesThe first opportunity comes forth out of the previously described weakness.

Serving Starbucks drinks in original Starbucks mugs could be a way to tacklethe paper cup-inferior quality problem and communicate a more luxuriousfeeling together with creating more logo and brand awareness with theeventual goal of creating customers share of heart instead of a mere shareof mind and establishing customer bonding. Together with this way of servingStarbucks drinks goes the notion of a bonus system which allows frequentcustomers to save for free gifts: for instance the original Starbucks coffeemug or Starbucks coffee. This allows the customer to also experience theStarbucks coffee at home and once again creates customer bonding andbrand loyalty.


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When visiting locations like Starbucks in countries like the United States andFrance (business) customers surfing the Internet while drinking a cup ofcoffee is a common sight. In Holland however, this WiFi connectionpossibilities are virtually nonexistent, even in Amsterdam. Here lies asubstantial opportunity for Starbucks, Amsterdam. Providing customers withSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprilTim Ensing, Dan Mackinnon, Lucia Suchankovaa (free) WiFi Internet connection service. Aside from the fact that activeInternet usage within Starbucks has a lot of commercially interestingbusiness possibilities (through cookies and other commercial digital devices,which in its turn fuels business alliance possibilities), it also targets asegment that has not yet been targeted before and it makes Starbucksparticularly interesting for all kinds of business people, providing Starbuckswith a more mature and contemporary image than a lot of other competitors.Needless to say, this Internet connection possibility is also appealing to othercustomer segments, especially younger people. Once again, this could have apositive influence on the image of Starbucks. Therefore this WiFi Internetservice opportunity is closely interwoven with the desired target customersegments as it lures certain groups into Starbucks and discourages others.Those discouraged groups would mainly be the elderly and groups ofyoungsters hanging around on the street (a problem in Amsterdam). This

opportunity thus serves two closely related purposes.An interesting fact is that ever since 2002 Starbucks head office in Europe issituated in Amsterdam. Business lobbying and politics should therefore beconsiderably easier when focusing on the aforementioned fact. One could saythat the link between Starbucks and Amsterdam already exists and that theAmericans had a reason for choosing this head office location in Europe. Thelaunching of a Starbucks location in Amsterdam is therefore a logical nextstep.Nike, another American company that is at least just as well-known inHolland as the Starbucks chain, also has its head office of Europe situated inAmsterdam. This summer (June 2006) a coffee corner in this Nike building

becomes available. One of the candidates is Starbucks (according to websitewww.kookjij.nl). Once again proof that the international Starbuckscommunity is finally working its way into Amsterdam and has faith in thepossibilities of survival there.ThreatsEthnic minority groups of youngsters hanging around in Amsterdam havebeen a problem for a few years now. Having these groups in your store, shopor Starbucks location could seriously harm the experience of other customersand eventually your image. Entrepreneurs in the major streets in Amsterdam(the Kalverstraat the Leidsestraat) have already encountered theseproblems. Luckily the Starbucks location thought of lies in another area ofAmsterdam which is relatively free from this problem. The area can be

characterised by a high density of young urban professionals, upper classresidents and sophisticated tourists. Customers within these segments willonly improve the contemporary image of Starbucks and thereby increase theentry barrier for these so-called ethnic problem groups. Nevertheless,Starbucks should keep track of developments in this area and realize that apossible threat could occur.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprilTim Ensing, Dan Mackinnon, Lucia Suchankova


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Competitors copying the Starbucks concept is another possible threat.Copying behaviour and stealing winning formulas has always been a problemfor entrepreneurs. It may be sometimes difficult to endure and differentiatethe initial product unless the product has such a big widespread name that itcan survive these imitators. Luckily, Starbucks has that kind of name andimage and should be able to withstand imitating behaviour by (upcoming)competition. A way to do this is by making a pre-emptive strike andlaunching Starbucks in such a clear and differentiated way (focusing on theoriginality of the Starbucks brand and image) that it is hardly possible forothers to compete with or copy this whole Starbucks notion. Offence is thebest defence here and Starbucks should enter the Dutch market making a lotof noise. Evidently, a substantial task lies here for the promotion,advertising and branding department.SegmentationThe segmentation part will be similar to the standard Starbuck segmentation.We will use demographic, psychographic and behavioral segments. First ofall, the demographic segmentation will focus on age, income and occupation.We see the 15-40 group as our main customer. This correlates with our ownobservations in French and Swiss Starbucks. This group can be divided intwo other groups. The group 15-25, and the group 25-40. The first group willhave a lower income, and probably be students. This is the youngest

generation, and for this segment Starbucks has to be hip and modern. Theother group is probably working and has a higher income. The differencebetween the groups is also that the first group will probably use the sittingspace whereas the second will most likely be customers who make purchasesand consume them outside of the store.In the psychographic segment we have focused primarily on lifestylessegmentation. This is very similar to the demographic segment above. Thestudents will have another lifestyle than the working group. Another lifestylesegment will be the people who drink coffee, and those who do not drinkcoffee. This is a crucial segment, because Starbucks has to have an imagethat you dont have to be a coffee drinker to enjoy Starbucks.

The behavioral segment is the most interesting one, and also the segmentthat can be the most influenced. It is strong because we can create newsegments. First of all, we will segment customers with respect to benefit andusage. Benefit segmentation is for the customers who go to Starbucksbecause of the Starbucks products or Starbucks service. So the segmentationhere will be (again similar to the demographic and psychographic) the peoplewho prefer to sit down and enjoy their product and the buy & go customers.The usage can be divided into light, medium and heavy users. WeSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 200Tim Ensing, Dan Mackinnon, Lucia Suchankovarecommend focusing primarily on the high usage segment. The advantage of

this type of segmentation, mentioned before, is that Starbucks can create anew behavioral segment group and through this, new customers. This canbe achieved through segmenting customers based on their desired benefits.A very recent example of this, introduced in several Starbucks through theworld is wireless internet. This is an extra incentive to go to Starbucks,because of the creation of benefits driven segments, in this example,customers who use wireless internet.It should be clear though that on international basis, the Netherlands are aspecific segment, in another bigger segment, Europe.


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TargetingThe main targeting activity will be undifferentiated marketing. This is ratherlogical because, the products are not being differentiated for specificcustomer groups. This type of marketing will be beneficial to us in that it isless expensive than attempting to market each product to each productsegment. We will instead take our market as a whole and market ourprimary product, coffee, to them. Of course, the non coffee drinker will havea possibility to choose from several non coffee products, and is there alsonon caffeine products for the youngest customers, but there is not a cleartargeting in this because Starbucks is not going to change its product mixspecifically for these segments.PositioningWhen we begin our marketing campaign we will focus primarily on buildingthe Starbucks brand and therefore we will position Starbucks quite generallywith respect to our market. The main goal will be to create a generateawareness of the brand so we can attract our customers. As Starbucksbecomes more established, however, we will focus more on positioning theproducts to our different segments. This will focus on two main segments;

the young, hip, and trendy segment and also the business segment.Financial AnalysisThrough the use of several analyses we have made an estimate of thepossible revenues and expenses we will incur in the first three years ofoperation, as well as what a possible balance sheet may look like forStarbucks Amsterdam. These projections have been derived from severaldifferent methods to arrive at the final projection. We have analyzedStarbucks most recent financial statements for the company as a whole andSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 200

Tim Ensing, Dan Mackinnon, Lucia Suchankovadivided these results by the amount of stores worldwide to get a sense ofaverage store performance.Please refer to Statement of Earnings in Appendix D.This is the data for an average Starbucks. We used this data to predictaverage sales and costs by exchanging the prices to the Euro. So, if theAmsterdam Starbucks would perform at an average level, this would be theresult. Of course this is not realistic because there are many unpredictablefactors that will arise. We are opening our store, so, we cannot expect toperform as well as the average store that has been open for several yearsbecause revenues are likely to be lower and we will occur several one time

costs associated with opening a new store.Another method we have used to calculate expected revenue was bycalculating the size of the coffee market in Amsterdam and multiplying byStarbucks expected market share, average sale and average customerfrequency in a year.Everyday there are around 800.000 persons in Amsterdam. Of course it isimpossible and also not realistic to account all those people as potentialcustomers. The Dutch population has a normal onion-population distribution,


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the tourists that populate Amsterdam will change this population, however,we do not expect significant changes. We can argue that the highest andlowest parts (very old, or very young) in the population distribution fall out ofthe Starbucks client market. This results in a drop of around 20% in the totalpopulation of Amsterdam. Also because of our location and the mentionedsegmentation in Amsterdam, 1/3 of the population will not be on a regularbasis in the part where our store is located and therefore cannot beaccounted as potential customers. This leaves us with approximately 425.000persons. This population base can be divided in two equal groups in thepopulation distribution. We are dividing our target market into two parts fordifferent reasons. First of all, the younger part will consist of students andother young adults. The other segment will consist mostly of the workingpopulation. This has two results. Firstly, students have more free time, andwill therefore be able to visit Starbucks more frequently. This also has to dowith the fact that Dutch people will tend not to go to a place like Starbucksearly in the morning as we have already explained in our customersparagraph. Secondly, Starbucks had a more positive image in the younggroup then in the older group. This we conclude after a (not representative)research on the biggest internet forum in the Netherlands. Around 40% ofthe young people say they would like a Starbucks, (just 15% is against),where this percentage is twice as low with the older generations. So if weknow that 40% would like a Starbucks, we can expect that around a quarterof these people for certain will use the Starbucks. If we combine this with apart of the 45% of the young people who didnt know Starbucks, or didnt

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprTim Ensing, Dan Mackinnon, Lucia Suchankovahave either a positive or negative feeling with Starbucks, we expect to havea realistic expectation if we say that around 20% of the young people will useStarbucks and 5% of the older group. As said, the two groups are almostequal, so this results in 25% of 425.000 persons. 106.000 Persons can beaccounted as not only potential customers, but as very likely customers. Ifthis group would spend around 4 euro (a achievable expectation), this wouldgenerate a yearly revenue of 425.000 euro.

Our team also spent considerable time observing customer behavior withinseveral Starbucks in Paris to get a sense of average length of stay, averagesale and occupancy rates. This resulted in the next:On the average, in a Parisian Starbucks, there is an occupancy rate about80%. Due to the several factors (not known, different culture) we cannotexpect this rate in Amsterdam. At least not in the first year. Because of ourlocation, we are not able to have more than 25 places to sit. So acombination of a lower rate and a low number of seats will result in anexpected occupancy rate about 75%. In the mornings the Starbucks will berather empty, and in the afternoon and evening it will be full. So, we expecton a daily basis to occupy around 75% of the seats. The average stay in aParisian Starbucks was around 45-50 minutes. We expect this to be more inAmsterdam because of the Dutch culture. A Dutchmen has to earn his

money back through using the facility, and therefore we can expect anaverage stay of one hour. We propose opening hours similar to the French,except that we would open it later in the morning and keep it longer open inthe evening. So we can better take advantage of the evening rush ofcustomers. This data would result in 187,5 sitting customers everyday. Wealso observed that the sitting customers spend more than customers whotake away their purchases. As said earlier, the price will be lower than inParis or other European city, but still on a premium level. That is why weexpect the sitting customers to spend around 5 euro. For a Starbucks whichwill be open for 350 days, this has a revenue of almost 330.000 euro. We


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expect around 15 buy & go customers every hour (again, low number in themorning, high in afternoon) who will spend around 3 euro. This will addanother 157.500 euro to the revenue. The total revenue will be around487.500 euro.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 200Tim Ensing, Dan Mackinnon, Lucia SuchankovaOur final projections factored these different methods and reduced expectedsales to correspond with the opening of a new store.The results can be found in the Statement of Earnings in Appendix E.We are projecting first year sales revenues of 450,000, however as this onlyan estimate and there are many uncontrollable factors at play that mayaffect the actual sales revenue we are also providing a high and low estimatefor the sake of analysis. Our best case analysis predicts 600,000 and ourworst case analysis predicts 300,000. As the company becomes betterknown in Amsterdam and we develop a positive reputation, sales will rise,this is reflected in the increasing expected sales revenues for the second andthird year of operation. We are predicting second year revenues of 550,000and third year revenues of 650,000.

During the first year of operations we will have several one time costsassociated with opening the store. This explains the higher than averageexpected store operating costs of 300,000. In the next two years thesesstore operating costs will drop down closer to average levels. Our cost ofsales are in line with the average Starbucks store as are depreciationexpenses.With all considered we are forecasting a first year net loss of approximately 70,000. We expect to make a profit in the second year of just under 6,000and just over 35,000 in the third. Our worst case scenario predicts a netloss of approximately 360,000 in the first year and a best case scenario ofabout a 30,000 net profit.

Advertising PlanDefinition of the Problem/ChallengeThere are a few challenges in introducing and implementing Starbucks inAmsterdam, the Netherlands. For starters, there are already a few coffeeplaces in Amsterdam like Bagels & Beans and Coffee Company, These coffeeplaces are going to create a competitive atmosphere. People alreadyexperienced the services and products of these coffee places, they arefamiliar with them and they know where to find them. However, we believe acity like Amsterdam, with its diverse crowd of people (tourists, students,visitors, and business people) will like the idea of something new. As apopulation, they are open to trying new things.

Another challenge of implementing Starbucks in Amsterdam is the prices ofthe coffees of Starbucks; they are not going to be cheaper than the rest ofthe coffee places around. That is why the focus of Starbucks should be on thegood, quality, tailor-made service and the whole Starbucks experience.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2Tim Ensing, Dan Mackinnon, Lucia Suchankova


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Starbucks will have the widest selection of coffees around, so the advantagewill also be in the fact that customers can customize their drinks to taste.Another possible problem is that some coffee places offer a savings card andwhen its full, you can get a free coffee / discount on your next coffee or buy.This is a great way to built up relationships with your customers and to makethem want to come back in essence, a loyalty program. Starbucks does notoffer this sort of service so they really have to make an effort in maintainingtheir customers and making it attractive for them to keep coming back; forexample by offering special coffees everyday, by creating a goodatmosphere, friendly personnel etc.We believe Starbucks should provide all the things a student (our primarytarget group) needs. The first thing that needs to be done is to make surethe services and products of Starbucks appeal to them. They should offerdifferent things than other coffee places, like different tastes or differentsizes. The whole experience of getting coffee at Starbucks should be differentfrom the possibilities you have at the other coffee stores. It is foreign, but itcan also fit into Dutch culture.We also want to provide them with comfortable chairs, the possibility to usethe internet to work on school, adequate light, good music, etc. In this way,we believe Starbucks will be more easily adopted by the target group.

Research resultsWe have done some research to find out how people in Amsterdam wouldthink about a Starbucks opening in their city. We focused on students, thembeing our primary target group, and interviewed a total of 100 peoplebetween the ages of 15 and 30 to be able to generalize the results.As it turns out, the 85% of students are really enthusiastic that a Starbuckswill be introduced in Amsterdam. Why? That will be the first Starbucks in theNetherlands and they are proud that it is going to be in their city.When we asked them about their current experiences with the coffee places,there were a lot of different answers. Some really liked the coffee places

Amsterdam offered now, but still, they were curious about Starbucks andsaid they would definitely go there to try it out. Others were really happywith Starbucks because they already knew all the places in Amsterdam andwould like to try something new.We also researched their opinion on the prices of Starbucks, which are a littlebit higher than other coffee places. Most students were ok with this, becauseit was new, and foreign. Therefore, the general assumption was that thecosts were higher. In the long term of course, they wanted to see somethingSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprTim Ensing, Dan Mackinnon, Lucia Suchankovaextra in Starbucks; a reason why it is more expensive than other places, in

other words, value for their money. However, some of the respondents, whoalready knew Starbucks from other cities in other countries, mentioned thatStarbucks does have a lot of variety in its products and it offers extra thingslike ceramic mugs, the iced and blended coffees and the coffee beans.To get a more general idea of when students planned to visit Starbucks, weasked about habits. 40% of students say they like to drink coffee most whilestudying, 27% while relaxing and 33% as a reason to get together withfriends. This indicates that drinking coffee is a part of the Amsterdamstudents lifestyle. It also gives insight to how to reach each segment of the


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target specifically.TargetsThe first target group and they will be our main focus, is students.Amsterdam is a real students city. A lot of different sorts of education isoffered there, ranging from different schools, to different educational levels(university, practical school, high school) and different directions. Next tothis, there are also a lot of student societies based in Amsterdam, so manystudents are in the city during the day or they travel through the city to go tothe station to go somewhere else.We believe this target group should be the main focus. They are social peopleand like to hang out, chat and have a drink somewhere outside of theirprimary residence because many of them live in small, cramped apartments,often with roommates and sometimes still with parents. They might need totalk about a presentation for class or they might have a meeting for theirstudents society, which is usually done somewhere in the city. Starbuckswould be the perfect place!This target group will use the take-out service from Starbucks right before orafter school or on their way somewhere, but most commonly, they will sitdown and talk while consuming the coffee and / or snacks. Amsterdam is asocial city; people dont live a very fast paced life, and value spending timewith other people.

The secondary target group is business people. This group will probablyreally appreciate the take-out service of Starbucks. They can get a quickcoffee before they go to work or after their work, before they get into thetrain and go back home, in addition to lunch breaks. Numerous bigcompanies are established in Amsterdam, so there is a lot of traffic frombusiness people coming into the city everyday.The success of Starbucks with the secondary target group is based on timepoverty business people are generally doing what they can to optimizeevery minute. Therefore, the quick turnaround time at Starbucks fits the

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprilTim Ensing, Dan Mackinnon, Lucia Suchankovalifestyle. Whether for breakfast, a lunch break or after work, business peoplewill appreciate the value of the product in that it saves time withoutcompromising quality. The central location can also be of benefit to thismarket for business meetings, as it is a neutral place with a wide variety ofproduct offerings.Advertising ObjectivesWe have one main advertising objective and that is to create awareness.There is a new store opening in Amsterdam and we want everybody to know

that!To accomplish this, we first have to educate our target group aboutStarbucks. We have to let them now what Starbucks stands for and whatthey can offer the clients. We want to communicate to the target groupwhere we will be located and what they can expect from the Starbucksconcern. We want to do this with an advertising campaign. (See Strategies)In doing so, we have to take into account the consumer perception process,which consists of five steps:


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1. Physical date2. Physiological screens (sensory)3. Physiological screens (emotional)4. Cognition5. Perception filesWe believe, Starbucks should focus on the last three, because they are themost important in Starbucks objective to be noticed and to be appreciated bythe target group.We want to make Starbucks a place where people feel good, where they aretreated with respect by friendly personnel and where they can enjoy andrelax. We want to make consumers feel good being in Starbucks andexperiencing their services and products. Because Starbucks has theadvantage of being able to offer a lot of different products, there issomething for everyone; tailor-made service / product. (Physiologicalscreens, emotional)To create awareness, we first want to make the people curious of what isgoing to happen. We will not right away reveal that there is a Starbuckscoming in Amsterdam. We want to make the people anxious, curious andinterested so that they will follow the whole process of the introduction andimplementation of the new store, which will make them more willing to gothere when it is actually established there. (Cognition)

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 200Tim Ensing, Dan Mackinnon, Lucia SuchankovaLast but not least, as said before, Starbucks is entering a highly competitivemarket in Amsterdam. There are many substitutes available there. That iswhy Starbucks should not be perceived as just another coffee place but assomething more than that. It should raise everybodys expectations and itshould clearly state that they can offer everything to everybody. Starbucksputs people first and adjusts the products they offer to them. (Perceptionfiles)

We can also look at the advertising pyramid (please see appendix H)First, we want to make people aware of the new Starbucks store, which isbasically the main activity. All the focus should be on that. We want to makeawareness process so strong, that the consumers are almost willing to goon to action right away and skip the other three steps in the pyramid.Strategy: Media PlanMixIn accomplishing the advertising objectives stated above, we want to usedifferent sorts of advertising. We will not use the tv ads as a medium.Starbucks has never done this because it is not effective in reaching the

market at the right time and place, so we wont use it here either.First, we want to use posters. We will focus on the public transportationsystem as the vast majority of students has to use this in going to school.We will place big posters in the train stations in Amsterdam (AmsterdamAmstel, Amsterdam Bijlmer, Amsterdam Centraal, Amsterdam Lelylaan,Amsterdam Muiderpoort, Amsterdam Sloterdijk and Schiphol Airport). Thesestations are used for people coming in to Amsterdam. We will also putposters in the metro stations and at the stops of the trams.


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Next to this, we will make use of the possibility to hang up posters in themetro and in the trams. Although these posters are smaller, their positionright next to direction signs ensures that they will be seen by everybody.We also want to make use of the internet. We want to approach thecompanies with internet sites which are popular and frequently used amongstudents. We are thinking about the following opportunities:- Radio 538, which is the most and best, listened to radio station in theNetherlands by students.- Hyves, which is a site to find old friends and to keep in touch withthem. It is mostly used by students and research shows that more that75% of the students use this site.- Hotmail.nl- University websitesSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 200Tim Ensing, Dan Mackinnon, Lucia SuchankovaLast but not least, we want to place advertisements in school papers or inmagazines distributed to schools or students. Every university or school inAmsterdam has its own newspaper where we can place ads in. Next to this,we want to approach the biggest students societies (the societies with thebiggest and largest reach of students in Amsterdam) and place ads in their

magazines.To reach the secondary market, the billboards along the side of the mainroadways and highways will be utilized also. The campaigns will be unifiedthroughout Amsterdam to send a stronger message, and to increaseretention among the primary and secondary target markets.FrequencyPostersWe want to start the advertising campaign 4 to 6 weeks before the Starbucksstore actually opens. The first 2 weeks, we want to make the target groupscurious. We want to draw their attention and we want to make them wonder

and think about what is going to happen. We want to involve them in thewhole implementing process. This will be internally referred to as Phase 1.The next 2 to 4 weeks, or Phase 2, the ads will be altered slightly to includemore information, such as the date of the grand opening and perhaps ageneral location. In Phase 3, which will take place 2 weeks before the grandopening, we will reveal the opening of the new Starbucks store. We willannounce the exact location. We want to make this opening really importantso we want to build up curiousity throughout the first part of the campaign,and once they are interested, give away the rest.InternetThe internet is a good medium to use because the primary target market hasproven to be almost completely computer literate. Hotmail is a popular

service with the age group and allows segmentation in terms of marketing.When users sign up, they enter their full address. Therefore, it is possibleonly to place banners on Amsterdam students sites. This lowers the CPM(cost per thousand), and effectively targets the primary target market.The banner ads used online will follow the same timeline and look asbillboards, only in a different format. This ensures the strength of one singlemessage, rather than confusing consumers with varying messages, whichindividually would be more difficult to remember.Ads


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Advertisements placed in school newspapers and other student publicationswill also be synchronized with the other mediums. The goal is to place an adin the same part (ideally, the samepage) of the paper, changing the insertionbased on the phase of the campaign.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2Tim Ensing, Dan Mackinnon, Lucia SuchankovaCost insertionThe advertising portion of the marketing plan has a budget of $40,000, orabout 9% of the total budget. This is to be distributed among the threemedia that have been selected. Billboards will receive the highest portion ofthe budget as a result of its wide reach, approximately $25,000. The internetads will have a budget of $5,000, and the remaining $10,000 will go towardsprint ads. These two allocations are based on cost of insertion (internet ismuch cheaper than print ads),but also based on reach. Print ads will bereaching a much more specific, targeted audience.FlightingFor all three mediums, posters, internet, and print ads, the flighting will bethe same. Due to the nature of the campaigns, whereas they are threephases of the same ads, it is necessary to maintain even flighting throughout

the campaign. During the third phase, an additional advertisement will beused with only the relevant information: a logo, address, and anannouncement about the grand opening party. These will be placed in thesame types of locations as the other ads, but refocuses the audience on theimportant when and where information.Strategy: CreativeThe creative is split up into two series within the same campaign. To see theads, please see Appendix I for Series 1 and Appendix J for Series 2. Phase 1ads focus on posing a question in the consumers minds, and to get themthinking. The mystery of seeing an ad and not knowing what it is for is what

will make it easier to remember. By the time Phase 2 comes around, theconsumer will realize it is a series, and continue to look back throughout thesecond phase to see what the completion of the ad will look like. Phase 3 ismeant to create excitement and pride excitement that a well known,successful company is about to open in Amsterdam, and pride becauseAmsterdam now joins hundreds of other cities around the world in theStarbucks family.Creative platformThe artwork selected for the background of the ads was purposely chosen notto focus on a specific continent. The view of the world is unusual, with thecities floating above and around the globe. It is a contemporary look at the

world, as cities come closer with globalization, and geography becomes lessimportant in the world of business. The campaign puts Starbucks Amsterdamin the centre of the map, among the worlds greatest cities. This evokes thefeeling of pride that is part of the creative strategy. The mysterious structureof the campaign, with its triphasal approach, is what creates the excitement.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,AprilTim Ensing, Dan Mackinnon, Lucia SuchankovaThe strategy has been proven in other campaigns to get people talking andeventually produce word of mouth, which can be the strongest way to


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advertise, without costing a penny. The copy works well with the visual tocreate that mystery, while incorporating Starbucks colours and in Phase 3,important information about the grand opening. Overall, the composition iswell harmonized, and reaches the advertising objectives that were defined.Big IdeaStarbucks is a cool place to study, meet new friends or talk to old ones, orjust run in and out for coffee the way you like it, with the familiarity of afriendly atmosphere that students and business people are enjoying aroundthe world a world that Amsterdam is now joining.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2006Tim Ensing, Dan Mackinnon, Lucia SuchankovaAppendix A:Price of a Starbucks tall latteSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2006Tim Ensing, Dan Mackinnon, Lucia Suchankova

Appendix B: Map of Downtown AmsterdamSophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2006Tim Ensing, Dan Mackinnon, Lucia SuchankovaAppendix C: Marketing to Youth exerptMarketing to Youth Starbucks customers are people of diverse ethnic,

income and age groups with varying tastes and interests. We embrace theirdiversity and strive to provide excellent customer service to those we serveby offering products that are relevant to our customer base and their varyinginterests and tastes, including some products which may appeal to youngpeople.While the Companys overall marketing, advertising and event sponsorshipefforts are not directed at children or youth, Starbucks has a long history ofsupporting community activities and events important to our customers,includingyoungTo help ensure all of our marketing efforts remain consistent with theseprinciples, we have formalized our long-standing practices by implementing

new review policies for all our marketing and communications activities.Review and Enforcement Appropriate measures and best efforts are takenso that Starbucks advertising and marketing is not specifically aimed atreaching young consumers.Communication of the policy: Starbucks policy on marketing to youth isshared with all staff within the marketing function.Campaign and Sensitivity Review: Starbucks marketing materials and


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promotional campaigns undergo a formal sensitivity review process priorto their approval and distribution. This process, led by Marketing, involves apanel of Starbucks employees from key parts of the organization -- such asCustomer Relations, Public Affairs, Corporate Social Responsibility,Diversity, Internal Communications, and Legal -- who review marketingelements and provide input verbally and in writing. The purpose of the panelis to identify in advance and avoid distributing marketing materials thatcould be inadvertently appealing to youth, racially offensive, widelycontentious or culturally insensitive. If consistent feedback is provided frommembers of the panel about a potential issue, the Marketing team adjuststhe materials or campaigns to alleviate the issue.Media Buying: When planning and executing marketing campaigns inwhich paid advertising media is used, Starbucks has instructed itsadvertising agency to select media vehicles whose audience composition isclosely aligned with Starbucks adult customer base.Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2Tim Ensing, Dan Mackinnon, Lucia SuchankovaAppendix D: Average Statement of Earnings

Average STATEMENTS OF EARNINGSDATATotal revenues$640.000Cost of sales including occupancy costs $262.400,00 2Store operating expenses$240.000,00 Depreciation and amortization expenses $38.400,00 General and administrative expenses$38.400,00 Subtotal operating expenses$579.200,00

Operating income$60.800,Interest and other income$1.500,00 net EBIT$Income taxes$23Net earnings$38Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2006Tim Ensing, Dan Mackinnon, Lucia SuchankovaAppendix E: Amsterdam Pro Forma Statement of Earnings

AveragSTATEMENTS OF EARNINGSDATATotal revenues$640.000Cost of sales including occupancy costs $262.400,00 Store operating expenses$240.000,00 Depreciation and amortization expenses $38.400,00


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Phase 2Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2006Tim Ensing, Dan Mackinnon, Lucia SuchankovaPhase 3Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2006Tim Ensing, Dan Mackinnon, Lucia SuchankovaAppendix J: Creative Series 2Phase 1Phase 2

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2006Tim Ensing, Dan Mackinnon, Lucia SuchankovaPhase 3Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen,April 2006Tim Ensing, Dan Mackinnon, Lucia Suchankova

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